Weeks after pulling in $5 million for storage-as-a-service offerings on the customer side of the meter, Stem has closed a Series-B venture round worth $15 million.

The venture arms of industrial giant GE and the international utility Iberdrola added to the round, although the amount of their investments was undisclosed. They join Series-A investor Angeleno Group.

The money will help Stem expand its sales team, target new commercial and industrial (C&I) customers, and help push its cloud-based storage system into different geographic markets.

Based in Millbrae, California, Stem has become a leading startup in the nascent distributed storage space. It started in 2009 under the name Powergetics, with the original intention of pairing lithium-ion batteries with residential storage. It soon shifted its focus to helping C&I customers lower peak demand charges and participate in the frequency regulation markets.

Stem's batteries provide 18 kilowatts of power for one hour, and are controlled by software that connects them to building controls. This allows Stem to compare current and historic building-level data with conditions on the electric grid to make predictive decisions about how to use storage. The company claims it can drop electricity costs by 20 percent.

In September 2011, the startup closed a $10.2 million Series-A round from Angeleno Group and Greener Capital to build up its integration hardware and cloud-based monitoring system. Seven months later, Powergetics rebranded itself as Stem, with a focus on selling "intelligent energy storage" as more holistic way to manage energy use within C&I facilities.

The company has since installed and monitored 6 megawatts worth of projects around the U.S., mostly in California. The $5 million invested by Clean Fleet Investors in October will be used to provide power purchase agreements for another 15 megawatts of systems.

The latest venture round will expand Stem's relationships in building energy management. The company has already developed sales channels and integration partnerships through ABB, Honeywell, Siemens and Schneider Electric. Giving GE an early stake in the company could help Stem reach further into the built environment.

GE, which is developing its own sodium-nickel-chloride Durathon battery and is refocusing corporate strategy on the “industrial internet,” is a natural partner, said Stem CEO Salim Khan in an interview.

"[GE] is looking at it as an investment with synergies to its entire business,” said Khan.

That includes C&I building automation, integration of distributed renewables, backup power for critical facilities, and a whole range of smart grid applications.

“GE is watching what’s happening at the edges [of the grid] with interest. Intelligent storage plays a role in those changes,” said Khan. “They want to be very involved in how Stem develops its channels and builds out its IT infrastructure.”

Stem is primarily focused on reducing electricity bills for C&I customers. But as the company starts aggregating capacity, the technology will become a more valuable asset (or a threat) to utilities and grid operators. This is one of the driving factors behind the venture investment from the Spanish utility Iberdrola.

“Iberdrola is interested in how it can use this aggregated capacity to shape the future of its energy operations,” said Khan.

Khan said that Stem is looking to grow its sales channels in a number of new ways.

The first is to pick up new customers outside of the hotel sector, where the company has seen the most success so far. Khan said his team would focus more on big-box retailers and light industrial firms where they can pitch the software/storage combination as part of a broader energy management strategy. Early indicators suggest a lot of potential in the retail space, he said.

"We have some customers who test the system in ten stores. When they see where this can go, they're willing to go to another 100, maybe eventually to 1,000. This works its way into a major expansion," said Khan.

The second strategy is to expand into new geographic markets beyond California. Khan said New York, New Jersey and Quebec, Canada are at the top of the list because they have the highest demand charges. Texas and Florida will be secondary targets in the U.S., along with international markets like Germany, Spain, France and Japan. Iberdrola, which works on projects all over the world, could help Stem expand beyond the U.S.

Stem also wants to increase its partnerships with solar developers, who can offer storage services as another way to shave demand charges and increase the value of a PV system.

“Our storage system has a lot of synergies with solar. We don’t think of them as competitors, but rather as partners,” said Khan. “Solar takes care of the energy; we take care of the demand charges.”

Distributed storage and solar PV have a lot in common. Although PV is far more advanced in terms of market penetration, Khan said that Stem's technology offers easier scalability compared to the early days of solar.

Unlike commercial solar, Stem's battery system requires no major construction or invasive engineering work. And after installation, if the customer doesn't want the service, the entire system can be easily removed and replaced in another facility.

"We see far less resistance on the customer side than solar did. This helps make financing even easier," said Khan.

Stem is also following solar's lead in financing. With help from Clean Fleet Investors, the firm is creating a power purchase agreement for distributed storage similar to the one pioneered by SunEdison. Khan said Stem is also eyeing the securitization of solar projects with the expectation of doing the same thing.

"Two, three or four years from now, we'll be ready to do that too," said Khan.

Stephen Lacey is a Senior Editor at Greentech Media, where he reports on energy efficiency, solar and grid modernization. He is also host of the Energy Gang podcast, a weekly audio digest of cleantech news.